Disney’s theme park segment fuels profit growth

waltz disney (SAY 2.81%) was devastated at the start of the pandemic when it closed the turnstiles at its theme parks around the world. Attractions are a major draw for people and generate billions in profits for The House of Mouse.

Fortunately, most governments have removed business restrictions and reopened Disney theme parks. As consumers unleash pent-up demand, Disney’s theme parks are driving the company’s earnings growth in 2022.

Image source: Getty Images.

Even with restrictions, Disney parks are ahead of 2019 levels

In its most recent quarter, which ended April 3, Disney’s theme park revenue reached $5.4 billion. That was up from the $2 billion in revenue generated in the same period a year earlier.

Disney’s theme parks were more constrained last year. In addition to park closures, some theme parks were operating with capacity restrictions that limited attendance.

DIS income table (annual)

DIS Turnover (Annual) given by Y-Charts

Of that $5.4 billion in revenue, Disney made an operating profit of $1.1 billion. Disney’s international theme parks have yet to return to profitability as they continue to be negatively impacted by COVID-19 restrictions. Specifically, Disney theme parks in Hong Kong and Shanghai were closed for much of the quarter.

Overall, the Disney segment that includes its theme parks earned $13.9 billion in revenue and $4.2 billion in operating profit in the first six months of its fiscal year. 2022. To put those numbers into context, in its last pre-outbreak fiscal year, which ended in September 2019, this same segment generated $26 billion in revenue and $6.7 billion in profit. exploitation. So, despite a world still in the midst of a pandemic and theme parks still operating under restrictions, the segment is poised to eclipse these 2019 results.

This growth is fueled by consumers releasing pent-up demand. Per capita spending at theme parks in the recently ended April quarter was 40% higher than the comparable quarter of 2019. Management spent the time the parks were closed to optimize activity. He implemented a digital reservation system to control attendance, increased ticket prices, added an option for visitors to pay to avoid queues, and instituted mobile ordering in restaurants. It all works together to increase spend and improve the customer experience.

Table of DIS operating revenues (annual)

DIS operating profit (annual) given by Y-Charts

Disney’s theme parks aren’t full

The strength of Disney theme parks is good news for shareholders. Disney’s theme park segment accounted for 45.5% of Disney’s overall operating profit in 2019. With improved features and pent-up consumer demand, it will come as no surprise that the segment makes up an even larger share of profits over the next few years.

The market may be focused on Disney’s streaming segment, but theme parks are its bread and butter. Investors should not neglect parks and watch for increased profitability as they recover to full strength, which may not happen for several quarters.